Without so much as part of $15 million in requested funding included in the state’s recently approved $40.8 billion budget, it’s back to the drawing board for a plan to build a hotel and conference center in downtown Frederick.
Developer Plamondon Hospitality Partners’ proposal relies on a combination of state government funds and county and city tax revenue generated from the project to fund about one-third of the $64 million cost. The $22 million — $15 million from the state and $7 million in tax revenue — would fund only the public portions of the project: the conference center, on-site parking spaces, utilities, road improvements and land at the site of the old The Frederick News-Post building at 200 and 212 E. Patrick St.
Plamondon would pay the remaining $42 million for the 207-room hotel and its amenities, plus a small portion of the 23,459-square-foot conference center meeting space.
Richard Griffin, the city’s director of economic development, said he was not altogether surprised that the project didn’t get funded in what he described as a “very austere budget,” despite unanimous support and continued advocacy from the Frederick County delegation.
But without state funding, the slow-moving project may be further delayed or modified.
“It does mean we need to take a step back and regroup,” Griffin said.
According to Griffin, the decision boils down to three options: place the entire project on hold with the hope that requesting state funding in the next year’s budget will be successful; proceed as planned by getting the project “shovel-ready” with all necessary permitting, site plan approval and finalizing a memorandum of understanding between the city and the developer; or some action between these two ends of the spectrum.
Alternatively, the developer could fund the entirety of the project itself, making city approval and state funding unnecessary. That option is unlikely, Griffin said, since the public-private partnership was born from the results of two studies showing a developer would need financial help to make such a project profitable.
No decisions have been made, according to Griffin, who said the groups involved haven’t met since the state budget was approved.
John Fieseler, a member of the advisory team and executive director of the Tourism Council of Frederick County, indicated that certain components of the project can move forward even without the funding.
“There’s so many aspects of this,” he said. “From the city side, there are a lot of other things that have to happen.”
These include a study to determine if an additional parking garage is needed and the MOU, which Pete Plamondon Jr., co-president of the development company, said he hoped will be ready for review by the Mayor and Board of Aldermen in the next 30 days.
“We’re very close to 100 percent agreement,” Plamondon said of the MOU.
Several Frederick County delegates pledged to continue pushing the downtown hotel and conference center project for funding in the next fiscal year’s budget.
Delegate Carol Krimm, D-District 3A, said she was hopeful the governor would include money for the project in the next budget.
“I wouldn’t extend the effort if I didn’t think there would be a positive outcome,” she said.
Delegate Karen Lewis Young, D-District 3A, described the project as a top priority for county representatives, and expressed surprise that even a minimal amount of project funding was not included in this year’s budget.
“Within the scheme of a $40 billion budget, $7.5 million, or even $5 million, that’s just seed money,” she said.
The city originally requested $15 million from the state’s budget, which delegates chose to split into two $7.5 million requests — to be split between the 2015 and 2016 budgets — given the conservative budget expected from Gov. Larry Hogan.
“I still think it’s realistic, but of course, I thought it was realistic this year,” said Lewis Young of the plan to present the same funding request next year.
Lewis Young also suggested exploring other options, such as including more private investors or investment tools.
Her husband, state Sen. Ron Young, D-District 3, advocated for an alternative option to state funding as well.
“I don’t think he’s going to fund a hotel,” Young said of Hogan. “I think we had a chance to get some funds in the last administration, but it’s going to be more difficult yet.”
Instead, Young proposed reallocating the funds designated for the project’s parking to the conference center, and expanding the public-private partnerships proposed for the project.
Supporters have praised the project’s economic benefits for the city and the county extensively.
Fieseler described it as “the next big gamechanger for Frederick.”
Plamondon crowned it the “biggest economic development downtown Frederick has ever seen,” apart from Carroll Creek Linear Park.
According to a study conducted by the Maryland Stadium Authority in 2010, the project would create 280 jobs, 110 at the hotel itself and the rest indirectly at other area businesses based on the increased traffic to the area. The project’s estimated economic impact totals over $25 million annually, including both direct and indirect spending. It would generate $1.5 million in state taxes per year.
The project has been well-received by the public because of these economic benefits, Plamondon said.
But Lewis Young noted that the project plans could be reframed to better highlight these benefits, which might make Hogan more willing to provide funding in the next budget.
“We need a package and a business plan that resonates with him,” she said.
Plamondon pledged continued support to the project as it has already been designed, despite the setback in state funding.
Of changes to the design, “we really haven’t gone down that path,” he said.
Griffin also maintained the city’s commitment to the project.
“We continue to believe it’s not only worthwhile but a very fundable project,” he said.